Tech stocks are the future of the stock market for the individual investor. Whether you’re looking for startups or want to get a piece of the first $1 trillion tech company, there are opportunities galore. And there are 100 different lists that will give you advice on which stocks to invest in.
But what every investor should have is at least one tech stock that pays a quarterly dividend. The reason is simple: everyone can always use a few hundred or thousand dollars of income regardless of how volatile the stock market may become. This list has been designed to offer you the five best tech stocks that you are likely to be familiar with. Familiarity will make your investment decisions easier.
For example, if you hate Apple Computer just because it is Apple (you know who you are) then you are more likely to know more about Microsoft because you buy their products or have a vested non-investment interest in the company. In other words, following Microsoft is something you would do whether you have any stock or not. This approach saves you time and offers the opportunity to reap that quarterly dividend check.
1. Microsoft (MSFT)
Most people who have a personal computer, especially a desktop (yes, we know they are more of a retro thing) knows about Microsoft. Their dominance in the consumer word processing and office suite software sectors gives them a significant advantage over even its competitors who offer free software solutions. It has a market cap of $752 billion and annual revenues of more than $100 billion. It has more than $132 billion in cash reserves and a cash flow that exceeds $12 billion. Its latest declared dividend was $0.42 per share. The company has seen its quarterly dividend steadily increase over the years, and that trend can be expected to continue, in part because amazingly, there is a resurgent interest in its office suite software. But the hidden advantage for dividend seeking, high tech investors is that Microsoft is reducing the number of outstanding shares available, meaning there will be roughly the same amount of investors sharing a bigger pie.
2. Apple (AAPL)
Even if you don’t like Apple Computer, you have definitely heard of them. It’s hard not to given their dominance in the smartphone market. They have a core group of products - the iPhone, iPad, and iTunes music service – which is user friendly and accounts for a goodly part of their annual revenues. With a market cap of $925 billion, seeking to become the first $1 trillion company, and annual revenues of $269 billion, its stock price is something for every tech investor to behold. Apple’s latest dividend payout to shareholders was almost twice that of Microsoft at $0.73 per share. All those apps people are downloading and using are currently helping the company add 31% to its coffers, and given the increasing number of apps in the AppStore, this does not appear to be a revenue stream that will dry up anytime soon. But for the modest investor, buying 100 shares of Apple Computer to take advantage of that high dividend will cost you $19,000 – give or take a few dollars.
3. IBM (IBM)
If you have seen those television ads for that talking Watson computer, you have seen IBM at work. IBM has an interesting position in the stock market as it attracts both new high tech investors and older investors who are looking for security. Its market cap is less than Apple and Microsoft at $131 billion, and it has annual revenues of $80 billion. What has historically attracted investors to the stock, and continues to do today, is the amount of its dividend payout. Since 2008 that amount has tripled, from $0.50 per share in May, 2008 to $1.57 as of its last declared quarterly dividend of May 9, 2018. Its current stock price is a bit more manageable at $141 per share, but based on the quarterly dividend for 100 shares you can reinvest the money and buy 4 additional shares of stock without spending a dime. The current problem for investors of IBM is that it is a legacy company, so its future stock price potential is generally considered to be stagnant.
4. Intel (INTC)
Intel is one of the very few microprocessor companies that actually airs television ads for its semiconductor processors. Perhaps one reason is that is produces about 85% of all the world’s microprocessor chips. With a market cap of $260 billion and annual revenues of just under $68 billion, it rivals the other tech companies on this list. But at $0.30 per share, its dividend does not seem that impressive, and makes you wonder why Intel made the list. In fact, much of their microprocessor business has been connected to the PC, and the general sales of PCs have been declining for some time. Intel’s future is the Internet of Things, which has already begun to take hold and will only become more ubiquitous over the next decade. Also consider that with cybersecurity continuing to be a concern for all computer users, rather than the first line of security being the device’s software it can be directly built into the chip. As long as there are computing devices, you can expect Intel to have a significant say about its future.
5. Texas Instruments (TXN)
Texas Instruments is another legacy company that is not as prominent as it once was to the average computer person. Compared to the other companies on this list, it has a relatively modest market cap of $109 billion and annual revenues of $16 billion. So how did it manage to make it on to this list? The financial concept of FCF – Free Cash Flow. This is basically the amount of cash the company can freely spend that is not committed to other company expenses or debts. Texas Instruments has plenty of it, and has historically used it to reward investors. Using the IBM comparison, in 2008 the company offered a $0.10 per share dividend. In April of this year it is at $0.62. That is a 500% increase over a 10 year period.
Written by Garrett Parker
Read more posts by Garrett Parker